Report shows student loan amounts, default rate increasing
A report from the U.S. Department of Education and the National Center for Education Statistics shows that education is not only a business, it’s a growing one.
Post-secondary education institutions’ total annual spending has increased by $145 billion from 2000 to 2011, or 43 percent.
In 2011, the government represented one-third of that total annual spending on education, including $146 billion dollars worth of financial aid given out in the form of student loans, work study or grants. Of that $146 billion, student loans, the category of aid that must be repaid, account for $108.6 billion of the total financial aid.
The number of students in need of loans and the amount given to each student have both increased from 2000 to 2011. In 2000, $43 billion in government loans went to 7.5 million students. In 2011, 108.6 billion in loans went to 19.2 million students.
More college-attendees are having a hard time repaying their student loans. According to a U.S. News and World Report article, the two-year cohort default rate, or percentage of borrowers who didn’t make a loan payment in the first 270 days they were supposed to, has almost doubled from 2005 to 2010. In 2010, it was 9.1 percent. In 2005, that rate was 4.6 percent.
After Congress failed to pass a bill by July 1 to keep federally subsidized student loan interest rates low, cost to students is expected to increase by $2,600, FOX 4 reported. Rates jumped from 3.4 percent to 6.8 percent on July 1.